Ontario markets lead Canada in Q2 price growth – Royal LePage
Once again proving their strength and resilience – even in the face of an ongoing pandemic – Ontario housing markets led Canada in price growth in the second quarter of 2020.
According to the Royal LePage House Price Survey and Market Survey Forecast, the aggregate price of a home in Canada increased 6.8 per cent year-over-year to $673,072 in the second quarter. Once provinces allowed regular real estate activity to resume, demand surged in many markets. Inventory levels, already constrained pre-pandemic, have failed to keep pace.
“Home prices shot up in the second quarter as a crush of buyers entered the market, attracted by extremely low interest rates and the perception of bargains to-be-had,” says Phil Soper, president and CEO of Royal LePage. “Across Ontario and Quebec, in particular, the demand for housing outpaced the growth in supply, especially in the early weeks post-lockdown. The surge in the number of first-time buyers was felt acutely, as these housing consumers soaked up supply without contributing to it.
“We are now seeing sellers return to the market in key supply-constrained regions in numbers sufficient to meet demand,” Soper adds. “Homebuyers should enjoy more reasonable conditions with stable prices and improved selection in the second half of the year.”
When broken out by housing type, the median price of a standard two-storey home in Canada rose 8.0 per cent year-over-year to $794,392, while the median price of a bungalow increased 3.9 per cent to $550,289. The median price of a condominium increased 5.3 per cent year-over-year to $503,983. Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions.
“COVID-19 shaped the real estate market during the second quarter in every possible way,” says Soper. “As consumers and realtors complied with April’s shelter-at-home directives and only urgent housing needs were serviced, sales volumes plummeted to one-third of normal in our largest cities. As the reality of extended and potentially permanent work-from-home employment sunk in, people pondered both the location and size of their homes. Simply put, larger homes in smaller communities have become more fashionable. As competition for these properties heats up, bidding wars are more common in what were our quieter cities and towns.”
Greater Toronto Area
Pent-up demand coupled with a lack of supply in the GTA resulted in significant price appreciation in the second quarter, with the aggregate median price increasing 10 per cent year-over-year to $899,001. When broken down by housing type, the median price of a standard two-storey home increased 10.7 per cent year-over-year to $1.05 million; bungalows rose 6.4 per cent to $852,260; and condominiums increased 9.3 per cent to $599,235.
“Prior to the market disruption caused by the pandemic, the GTA was on track for doubledigit price growth in 2020,” says Kevin Somers, chief operating officer, Royal LePage Real Estate Services Ltd. “While the first half of the second quarter saw market activity severely curtailed, as soon as the market woke up in late May, sales quickly accelerated. However, with listings not keeping pace and buyer competition high, we are again seeing double-digit price appreciation in the region.”
Royal LePage is forecasting that the aggregate price of a home in the GTA will increase four per cent to $882,000 in the fourth quarter of 2020 compared to the same quarter last year.
“While buyer demand outstripping inventory has been typical of the Toronto market, the return of buyers before sellers in the second half of the quarter amplified price growth, says Somers. “Sellers are now returning, and while buyers should not expect bargains, they may find the second half of the year more reasonable for inventory and price appreciation.”